UBS Returns Massachusetts Funds Amid Auction Probe

NEW YORK -- UBS AG agreed to return more than $35 million it invested in auction-rate securities for 20 towns and public agencies in Massachusetts amid a state probe of how the debt was marketed, Bloomberg News reported Wednesday.

UBS misled the public officials by buying securities that weren't a “permissible investment'' under the state's municipal finance law, according to Attorney General Martha Coakley. Authorities are still investigating whether the firm lied to the investors about the auction-rate obligations, which may result in penalties under the state's False Claims Act, Coakley said in a news release, according to Bloomberg News.

Under the agreement with UBS, the 20 towns and agencies will avoid losses on the more than $35 million they invested, Coakley said, according to Bloomberg News.

-- NYSSCPA.org News Staff

Posted on 5/7/08